What percent of Google’s stock is AdSense?

March 9th, 2010 by

Google (NASDAQ:GOOG) is known for its main search advertising business.  The company also makes money through the search and content ad partnerships of its AdSense business.

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Apple Could Earn $400 Million in 2010 from Ebooks Alone

March 9th, 2010 by

Apple (NASDAQ:AAPL), which competes with Amazon’s (NASDAQ:AMZN) Kindle, is expected to launch iBookstore alongside its tablet PC, the iPad, in April 2010.  iPad owners will be able to download books to their iPad through iBookstore, an application which will be available on Apple’s iTunes store.  We estimate that iTunes & iPhones Apps constitute about 6% of the $267 Trefis price estimate for Apple’s stock.

We expect Apple to generate ebook revenue of $400 million in 2010 by selling around 48 million ebooks at an average price of $8.  You can access our full forecasts and rationale for AAPL here:

  1. Apple Could Sell 48 Million Ebooks in 2010
  2. Apple Ebooks Could Be Priced at an Average of $8

You can also modify our forecasts through the links above to see how Apple’s stock would be impacted if the number of iPads and eBooks sales were to grow faster than what we forecast.

For additional analysis and forecasts, here is our complete model for AAPL.

Apple Could Sell 48 Million Ebooks in 2010

March 9th, 2010 by

A starting point for estimating Apple’s potential ebook sales is Amazon.  Foner Books, a book publishing company, estimates that Amazon sells 60,000 ebooks per week.  We expect Amazon to sell 1.2 million Kindles in 2010; this would mean about 2 ebooks sold per Kindle per month or 24 ebooks sold per Kindle per year.

Since iPad users will not necessarily be as devoted ebook readers compared to Kindle owners, we estimate a ebook ratio for iPad of 1 ebook per month for each iPad sold.  We have estimated that Apple will sell around 4 million iPads in 2010 (see our analysis here) which implies 48 million ebooks sold through the iTunes store in 2010.

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Apple Ebooks Priced at an Average of $8

March 9th, 2010 by

Apple (NASDAQ:AAPL) is in talks with five major book publishers – Penguin, Simon & Schuster, HarperCollins, Macmillan, and Hachette – to make their books available for download through the iTunes store.

Apple is looking to create a variety of price points for ebooks – $14.99, $12.99, $9.99 and $4.99.  New books that are available in bookstores as hardcovers are likely to be priced at the higher range; however, we believe that the majority of books will be priced lower and estimate the average ebook pricing through Apple will be around $8 for 2010.  We also expect eBooks pricing to decline to around $6.7 by the end of Trefis forecast period.

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Google Apps Can Win Microsoft Office Customers with DocVerse

March 8th, 2010 by

Google (NASDAQ:GOOG) recently acquired DocVerse, a technology startup that makes it easy for people to edit Microsoft Office files online. Microsoft’s (NASDAQ:MSFT) Office software dominates the enterprise productivity software market with share of around 95%.

We believe that DocVerse will make it easier for users of Office products like Word, Excel and PowerPoint to transition to Google Apps.  We expect that Microsoft will lose share in the productivity software market going forward due in part to increasing competition from Google Apps.

Below we explain the significance of Microsoft Office to Microsoft’s stock and Google Apps to Google’s stock, as well as how Google threatens Microsoft’s dominance in the productivity software market.

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Symantec Benefits from Health Care Industy’s Need to Cut Costs

March 8th, 2010 by

Symantec (NASDAQ:SYMC) recently announced the launch of a hosting service designed to let health care providers store, archive, and share their medical records using Symantec’s remote storage facilities.

The company’s new Symantec Health service is designed to help hospitals and health care companies reduce the costs associated with housing medical records.  As health care firms are forced to keep more image-based files (such as lab tests) for longer retention periods, their storage costs have soared.

The Symantec Health service will offer a cloud-based storage environment where companies can budget and pay only for the storage they need from Symantec.  We believe that this new offering can spur further growth in Symantec’s Software-as-a-Service (SaaS) business which we estimate constitutes 4% of Symantec’s stock currently.

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Growing Nickelodeon Subscriber Fees Important for Viacom’s Stock

March 8th, 2010 by

Viacom’s (NYSE:VIA) Nickelodeon is one of the highest rated TV channels for children in the US in terms of total daytime viewers. It primarily competes with the Disney Channel, owned by Disney (NYSE:DIS) and Cartoon Network, owned by Time Warner (NYSE:TWX).  Nickelodeon is known for popular animation shows like Spongebob and Dora the Explorer.

We estimate that Nickelodeon is the most important channel for Viacom contributing about 13% to the $35 Trefis price estimate for Viacom, or about about $2.7 billion of Viacom’s overall value.

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Touch Kindle Can Compete Better with iPad and Boost Amazon’s Stock

March 8th, 2010 by

To better compete with Apple’s (NASDAQ:AAPL) iPad, Amazon (NASDAQ:AMZN) recently acquired Touchco, a New York based touch screen technology start-up that will enable Amazon to add touch screen functionality to its ebook reader the Kindle.

We expect that touch screen capabilities will help Kindle sales in the future by making the device more attractive to potential e-reader and iPad buyers.  We don’t expect touch screen functionality to result in a meaningful increase in Kindle pricing and we believe that the pricing gap between the Kindle and the iPad will remain significant initially.

A narrowing feature gap between the Kindle and iPad, combined with lowering Kindle pricing, can help drive sales of the e-reader device and boost Amazon’s stock.

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Trefis Analysis: What percent of eBay’s stock is PayPal?

March 5th, 2010 by

eBay (NASDAQ:EBAY) is known primarily for its marketplaces (ebay.com, half.com) where buyers and sellers exchange a variety of merchandise online.  However, the company also makes a significant amount of money from its online payments platform, PayPal.

What percent of eBay’s stock do you think is PayPal?

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Shifting Consumer Preference from Buying to Renting DVDs Can Benefit Netflix’s Stock

March 5th, 2010 by

Netflix (NASDAQ:NFLX), which makes money by charging monthly subscription fees to its movie rental customers, can benefit from the shift in consumer preference to renting instead of owning DVDs.

We have a Trefis price estimate of $57 for Netflix’s stock (versus market of $68) and believe there could be additional upside if the shift in consumer preferences leads to a greater increase in Netflix’s subscriber base than we currently forecast.

Netflix’s customers can choose to rent DVDs by mail or stream movies online through its website. We believe that Netflix’s core competencies are in line with media entertainment market trends and changing consumer behavior.

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